Businesses Repositioning for Sustainable Development

2:31:53 PM | 4/5/2023

Lingering difficulties and challenges such as heightened risks of economic recession, protracted Russia-Ukraine conflict and supply chain disruptions will continue to affect the economy in 2023 and later. This will impinge on implementing the country's socioeconomic development goals and tasks. In that context, changing the growth pattern, restructuring the economy and developing the business force to enhance economic competitiveness, internal capacity, and self-reliance need to be achieved to accelerate recovery, capture opportunities and create breakthrough momentum for the next period.

Vietnam’s textile and garment industry targets to achieve export revenue of US$68-70 billion and gradually move to sustainable and circular business by 2030

Identifying challenges, opportunities for successful sustainable development

According to VCCI President Pham Tan Cong, business repositioning for sustainable development comes as a matter of existence and development for business, and has changed a lot at the back of the COVID-19 outbreak and global uncertainties.

In the face of global uncertainties and recent strains on world banking and financial markets - the "fortresses" that seem to be very resilient, the factors that businesses can firmly rely on as the banking system of Switzerland (Switzerland's second-largest bank) also collapsed. This led entrepreneurs to ask: So, how do we reposition our businesses to survive and grow?

According to Mr. Cong, the new context has posed enormous challenges to leaders, business executives and even governmental agencies because the existence of businesses is associated with national economic strength as well as State budget revenue. Another matter of concern is the context and development goals of Vietnam are different.

“After the 13th Party Congress, a new phase started. Vietnam will strive to become a high-income country. Thus, its requirements and position in the new period are also much higher. As General Secretary Nguyen Phu Trong said, 'We have never had the opportunity, position and international prestige we have today,'" Mr. Cong emphasized.

He said, as Vietnam will become a developed and modern country in less than 25 years, the business community must also be modern and strong. Development is not just about making a profit for themselves, but caring about environmental, social and corporate governance (ESG), business ethics and business culture.

This issue was also raised by VCCI at its 7th Congress in 2021: Building the foundation for business ethics and culture of Vietnamese entrepreneurs in the new era.

“We have to think differently, reposition our businesses, from the vision, development goals, their position in the industry as well as in the economy, and reposition their technology capacity and corporate governance," said Mr. Pham Tan Cong.

In the coming time, researchers and authorities must care about not only State-owned enterprises but also private ones, he noted. It is essential to identify challenges and opportunities to discuss solutions for successful sustainable development to keep Vietnam's achievements in more than 35 years of Doi Moi (renovation) to be further promoted and make Vietnam a fast-growing, green and sustainable country.

Vietnam can help businesses reposition successfully

To reposition sustainable development, Vietnam needs to build an environment in which the Government has guidelines, specific guidance for companies, especially SMEs, to realize the importance of repositioning their innovation-enabled business to catch new opportunities and promptly update regulatory changes and global changes to local businesses, said Ms. Lam Thuy Nga, Head of Large Corporate Banking Division - HSBC Vietnam.

“Organizations and associations join hands to support the Government in providing innovative knowledge every day for the Vietnamese business community, help connect and share experiences and successful domestic and international innovation cases,” she emphasized.

Businesses need to actively learn and explore from shared activities in the business community and from domestic and international consultants, global business and investment trends, new consumer requirements and advanced technologies to flexibly apply them to business operations to improve labor productivity, quality and added value of products and services.

Investing in proven R&D activities in many countries is a catalyst for successful innovation. Therefore, potential businesses should see this as an activity that needs attention, said Ms. Nga. The government also needs to make enough R&D investments because Vietnam is currently one of the world-leading high-tech exporters, encouraging high-quality and high-value FDI. Innovations need a core workforce with appropriate knowledge and expertise. Hence, companies need to select, facilitate and train capable employees to be cultivated and brought into full play in this process.

“When the world changes, as one of the fastest-growing, most dynamic economies with high openness and extensive participation in the global value chain, Vietnam cannot stand still. We are fully capable of doing this. If companies make good use of such advantages, are quick and accelerate further, they can create great value in innovations,” she emphasized.

Mr. Dau Anh Tuan

Deputy General Secretary, Director of Legal Department of VCCI

The economy of a country can only develop robustly if there is a strong domestic private sector. Therefore, some policies need to be opened up. To further boost domestic private economic development, Vietnam needs to step up administrative reform in all sectors and at all levels. This solution will help many businesses reduce costs and move toward more sustainable development goals.

Besides, it is necessary to apply information technology in a substantive manner, increase stability and predict legal policy. Many companies said that the legal risk is greater than the market risk. So, more drastic reforms are needed.

In addition, market roles are essentially promoted, including some industries such as petroleum. Currently, the inadequacy of the petroleum market is State management and intervention in the market. At the same time, it is necessary to develop solutions to attract foreign investment and protect the domestic market in a reasonable and legal manner with wise policies.

Mr. Nguyen Quoc Hiep

Chairman of Vietnam Association of Construction Contractors (VACC)

To reposition sustainable development for companies, the first key stage is to build a legal framework to protect the interests of construction contractors in economic relations with investors.

In fact, construction contracts cannot be resolved by the Civil Code because they will drag on for decades and investors continue to refuse cooperation. Therefore, it is necessary to include this issue in specialized laws such as the Law on Construction and the Law on Bidding to ensure equal rights for construction contractors before investors. This preconditions the existence of contractors.

Moreover, construction firms are interested in training and fostering skills for their employees and construction workers through joint training, including cooperation with foreign countries in training experts in urban underground development.

Regarding corporate restructuring, construction firms need to re-evaluate their production and business plans in 2023 in the current context of real estate and credit strains. Subject to their specific capacity, each construction firm must reposition the market, and restructure their products and business activities in order to overcome this difficult period.

Mr. Nguyen Huu Thap

Chairman of Tuyen Quang Business Association, Member of Executive Committee of VCCI

Apart from institutional barriers, one of the major challenges to SMEs is the low quality of human resources. A high proportion of business owners and managers lack training, management knowledge and skills as well as management experience. All of the above limiting factors affect corporate competitiveness.

In the midst of intensive international integration, improving competitiveness has become a matter of survival for enterprises. Therefore, the government needs to further improve the legal environment, mechanisms and policies for enterprises. Accordingly, there is a need for further reducing costs for enterprises, first of all, unreasonable costs arising from State administration.

Companies need to actively seize opportunities and grasp governmental support to improve competitiveness in an integrating and developing environment.

Dr. Truong Van Cam

Vice President and General Secretary of Vietnam Textile and Apparel Association

In early 2023, the Government issued Decision 1643 approving the Vietnam Textile, Garment, Leather and Footwear Development Strategy to 2030, with a vision to 2035. According to the strategy, by 2030, the textile and garment industry will achieve export revenue of US$68-70 billion and gradually move to the sustainable and circular business.

To realize this goal, companies must first raise awareness and define sustainable and circular business as an inevitable trend. However, with 86% of companies in the industry being small and medium in size, depending on their conditions, they should build a roadmap and appropriate steps to transform into the circular business.

Companies in this industry in industrial parks need to coordinate with each other in using rooftop power to enhance efficiency, avoid waste, and save resources. The particularity of this industry is the high rate of offshore outsourcing, so they need to cooperate with brands in sustainable development to share costs.

Specially, relevant ministries and sectors need to seriously and synchronously carry out tasks and responsibilities stated in the strategy. The important task is to build large-scale textile and garment industrial parks and manufacturing complexes to deal with weak stages such as raw materials and energy. The Ministry of Finance needs to have preferential policies for textile and garment enterprises to boost green production and sustainable development.

Mr. Ngo Sy Hoai

Vice President and General Secretary of Vietnam Timber and Forest Products Association

Vietnam is currently home to over 6,000 woodwork companies (including 800 FDI companies) that employ over 500,000 workers. Besides growth achieved over the years, the use of cheap labor and raw materials is challenging as the rate keeps declining. Besides, as woodwork comes from forests and trees, timber has been constantly scrutinized. Wooden furniture is still reliant on foreign brands even though Vietnam is a big wood exporter. Another big challenge is that the wood industry has been depending too much on the US market.

Therefore, to reposition in the coming time, wood companies need to build in-depth link chains together; renovate technological equipment toward green economy and green trade; strengthen the accountability of wood processing towards a circular economy and ensure traceability. At the same time, it is necessary to reinforce the design capacity; build Vietnamese wood brands; and promote e-commerce to diversify markets.

By Anh Mai, Vietnam Business Forum